Observations focused on the problems of an underdeveloped country, Venezuela, with some serendipity about the world (orchids, techs, science, investments, politics) at large. A famous Venezuelan, Juan Pablo Perez Alfonzo, referred to oil as the devil's excrement. For countries, easy wealth appears indeed to be the sure path to failure. Venezuela might be a clear example of that.

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Guayana: The Upside Down Miracle By Damian Prat

January 28, 2013

While in Caracas, I bought a copy of Damian Prat’s book : Guayana: The Upside Down Miracle, Editorial Alfa, Colección Hogueras, Caracas, 2012, and all I can say that it is one of the best records of how the Chávez Government has destroyed this country, by selling its sovereignty, its assets and its principles for the sake of the preservation of Chávez’ power. Unfortunately for Hugo, there were other plans for him that interrupted his plans and have made the whole thing a whole waste of Venezuela’s money, for nothing.

And Prat does a magnificent job of documenting everything, step by step, he tells us how Chávez destroyed Guayana and its industries and continues to do so. In fact, the Government has announced now that it is giving the exploration of all our minerals to China’s CITIC, despite the fact that most of the work on prospecting what Venezuela has or not has been determined by Venezuela’s University Professors long ago.

But going back to Prat’s book, it condenses his program “Publico & Confidencial” in newspaper Correo del Caroni, where he chronicled the whole thing in over 2,000 articles, which together with 370 Tal Cual articles represents an amazing document that documents the destruction of Venezuela’s Guayana industrial complex. How Chávez used corruption to tie up loyalties, while making dozens of announcements that never materialized, How Chávez nationalized working industries, only to shut them down or reduce them to a fraction of their potential, so that we could import the same material’s via graft and corruption, involving the top leaders of Guayana’s industrial complex.

I will try to write separate articles about the many complex cases involving Guayana’s companies, so that each individual story can be told and remain here for the record in English.

Each of the companies has an incredible story of inefficiency and neglect. I will try to write an article about each. For now, here are some glimpses:

Tavsa: The seamless pipe company used to provide PDVSA with 90% of the pipes it needed. Today, the plant does not produce a single pipe. It was stopped by orders from the highest levels of Government and today PDVSA’s needs are supplied by China and Mexico, while 400 workers go everyday to work and do absolutely nothing.

Bauxilum: The company used to provide all of the bauxite needed in Venezuela, with up to 6 million Tons of production a year. Today, it produces two and a half million Tons a year, with the remainder being imported. Why? It is not clear, there has been no investments in the company, trucks don’t work, much promised Chinese loans never arrive. Someone is making a lot of money with these imports.

Sidor: Sidor now produces 11 million fewer steel beams that it used to before it was nationalized. These tubes are being imported mostly from Mexico, from Ternium, the same company that used to run Sidor before it was privatized.

Ferrominera del Orinoco: China via Wisco, is buying 40 million Tons of iron ore, while Venezuela’s use of this ore to produce higher grade products has fallen, and we have gone from using 60% of our iron ore to only 30%.

Alcasa: Under orders from Chávez, 140 reduction cells were shut down, damaging the cells irreversibly, so that energy could be saved there and not in Caracas, which would have generated protests. The aluminum plant used to produce 200,000 tons of aluminum a year, now it barely manages 70,000.

And there is much more: Venezuela’s aluminun production was given to Glencore for money in advance, such that until 2018, the country will not receive one dollar from 30% of its aluminum production. We import oil coke for aluminum electrodes, even if Carbonorca accumulates the same material, because the Government has not had the US$ 400 million (Fonden, where are you when you are needed?) to pay for the plant that produces it. The dredging of the Orinoco river is now done by a Chinese company. And the importing of parts by Ferrominera has been outsourced to a Chinese company. Chávez has made eleven announcements with respect to Alcasa and not ONE has occurred.

Oh yes, meanwhile, union leaders of Guayana have been jailed, mysteriously killed or persecuted, all in the name of the revolution and socialism, while there are memos signed by Chavez not to sign any collective bargaining agreements with the workers.

But perhaps, nothing nails it like the fact that in fourteen tragic years, the Government has announced six new projects and not ONE of them was ever started, forgotten in Chavez’ over-promising and Sunday’s variety show Alo Presidente.

If you are in Venezuela, please go buy the book, so Mr. Prat can write others, for the rest, I will write individual chapters on this upside down miracle, so that the record is here to be seen in English.

BTW, Mr. Prat’s radio program in Union Radio also called “Publico y Confidencial” was recently cancelled under pressure from the Government, following the steps of reporter Marta Colomina and others, victims of Venezuela´s strange version of “free speech”

33 Responses to “Guayana: The Upside Down Miracle By Damian Prat”

I’ve been surfing online more than 4 hours today, yet I
never found any interesting article like yours. It is pretty
worth enough for me. Personally, if all website owners and bloggers made good
content as you did, the net will be much more useful than ever before.

[…] I wrote earlier about the book by Prat Guayana: The Upside Miracle, the destruction of Tavsa and Sidor is all documented there. But the decimation of the country continues in the name on the revolution. And nobody in Governemnt does or says anything. In fact, they continue the destruction and the mindless indebtedness of the country. […]

Those in on the deal make money on the exchange rate. They import at an inflated cost, with whatever invoice they present. Let’s say $100,000 dollars US (for something they paid $25K for). They are paid that at the exchange rate of 4.3 Bs/$.

It works like this: The importers pay Bs 430,000 for $100K US. Their actual cost is $25K. Because they lied on the invoice.

They pay the $25K, leaving $75K USD in their pockets, which they can either keep in an offshore account or trade at Bs17, so have a profit of Bs 1,275.000. Without needing to sell anything.

This is why the food rots in the ports and the cars are not made, and imports take over local production. There is more money to be made scamming the imports.

… and so much money too! When you can find a business that makes 300% profit on each transaction, de facto legally, how many people are going to do something else? All these Chavistas commenting on twitter or Facebook complain about “mafioso car dealers” but you know they would be doing exactly the same thing given the opportunity.

I read a tale a few years ago written by a American man who had forgotten his wallet and passport on a train in Morocco, back in the 1970s as I recall. He was panicked, trying to figure out what to do. A day later an old Moroccan man showed up at his hotel with the wallet and passport, bringing it back, all money in the wallet. When the American tried to pay the old man, give him a reward, the old man was offended and refused any reward. He was being honorable and honor did not require a reward. It is it’s own reward.

As with so many things- I would say this would/could never happen in Vz. Not in a hundred years.I haven’t read the book yet but according to what Diablo is stating here it is a well-written
summary of the manydestructive things Chavez has done-in just one state..

The sale of new cars has fallen from a high in 2007 of about 492,000 to about 122,000, a fall of about 75%.

Here in Isla Margarita the situation is even worse where a total of only 1891 cars were sold on the island in 2012, about 1% of the national total. The only way the agencies are surviving is through parts & service which may explain the ridiculously high prices for both.http://htl.li/hd4RT

The government is now talking about new laws restricting the prices of used cars which are sky high because there are no new cars. Like everything else in their completely misguided policies they seem to think that this will cure the complaints. Good luck with that.

To top it all off the Minister of Commerce said that she wouldn’t allow Venezuela to become a parking lot & that new cars were not a necessity.

But I would love a slightly used 1957 Chev Belair! Could get a 350 engine dropped in for a couple grand. More seriously, wouldn’t it be fun if used cars from the US, Japan, and Europe were allowed to be imported to Venezuela? The oldies here are getting, well, pretty old.

Car prices really are insane in Venezuela, from 5 to 10 x what they go for in the US.

The country, as a whole, is getting what it deserves. For innocent individuals, well, this is why I’ve been advising you to abandon ship, if at all possible. Sadly, things MUST get much worse before that get any better. For the innocents who can’t leave, I truly pity you. I suggest that you move as far from “civilization” that you can.

Actually, I think Chavez would love for many Venezuelans to move to small plots of land and live in huts and out of the cities..
Of course, there are no jobs, no money, and most people who have done this are not producing anything- not even growing food
just camping there and bragging about Chavez..

As Lou says, the cost of mailing the book from Venezuela is most likely the main reason for its high cost. Books which are sold across borders are prime candidates for transferring to and selling in e-book format. I recently bought a Spanish language Kindle book which was MUCH less expensive than its paperback price. I ended up paying about what I would have paid for a generic used paperback at a local bookstore.

Prat’s book on Guyana would be an excellent candidate for translation into English for use in Latin American studies classes in the US and in Europe.

I hope someone has e-mail addresses of many Venezuelans that live in US and could send them a (I know-spam)note saying
this book is veryrevealing and worth reading.
By the way I missed you guys(-Diablo- this is another most
outstanding story. Thank for this.) Was in hospital for almost 2 months and 3 weeks in rehab- had to learn to walk, etc. again…
lost 35 lbs. 3 very close to death surgeries..

I recall watching a “Cadena” one night held in Guyana during the campaign. The spectators (pre-selected workers) sitting in the audience were not happy campers and asked a lot of pointed questions of Chavez. Some were outright hostile. I thought that night would be the turning point of the campaign. It was sort of a “the king has no clothes” moment. But, of course, it wasn’t to be.

The funniest part was when Chavez asked one of the heads of one of the local companies (someone appointed by Chavistas of course) what certain initials meant (those initials being the main product or process of the company), the guy fumbled around and in the end could not answer! No, it took a worker of the company to describe the process.

That pretty well summed up Chavismo for me…..no one in charge really knows what the fuck they’re doing.

What is the future of the Guyana? Can they even be reformed to fiscal sanity and productivity at this point, or has Chavez so poised the well that any attempt at doing so by anyone but Chavez will result in a social explosion?

I’m guessing they will limp along in some form or another losing money year after year, being put to a slow death over a series of administrations much like the British car industry.